Question

a face value of $450 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 8%. Assuming that Auerbach issued the bonds for $388,844,955, what interest expense would it recognize in its 2021 income statement

Answer 1

Answer:

$7,776,899

Explanation:

Calculation to determine what interest expense would it recognize in its 2021 income statement

Interest expense= $388,844,955 * 8% * (3 months/12 months)

Interest expense= $31,107,596.4 * 3/12

Interest expense= $7,776,899

Therefore the interest expense that would be recognize in its 2021 income statement is $7,776,899